IT Contractors discussing

Increasing demand for contractors as employers turn to flexible professionals due to skills shortages

Posted on 25th April 2022 by

According to the Latest Recruitment Trends Snapshot report from The Association of Professional Staffing Companies (APSCo), the first quarter of 2022 ended on a positive note with significant increases in white collar recruitment.

Despite the freelance market being badly affected by both the Coronavirus pandemic and private sector IR35, it appeared that contract professionals were in high demand in Q1 of 2022, which was fueled by skills shortages in certain sectors.

The recruitment figures cited from the research by Bulhorn, revealed:

  • Permanent vacancies up 12% on February 2022, and 17% up year-on-year.
  • Contractor demand up 22% on February 2022, and 24% up year-on-year. (1)

As the press release by APSCo states, the figures are indicative of the current challenges businesses are facing when looking to fill key roles in their organisations. Hence why many businesses are turning to contract professionals because of the skills shortage in the recruitment market.


Demand on the recruitment industry shows no signs of easing

According to APSCo permanent placements were up 16% month-on-month in March 2022, but the greatest rise was seen in the annual comparison with March 2021, with employee hires up 45% on last year and contract placements increasing 27% month-on-month and increasing by 11% on March 2021. (2)

The rise  in placements are welcomed, but also creates cause for concern. On 8 March 2021, Covid restrictions were eased on the back of the government’s successful vaccination programme. APSCo’s data at the time showed placements rose on the back of the confidence that returned to the recruitment market and the economy.

The need to reboot the UK economy, recoup some of the huge economic losses suffered by many businesses, and fill roles that had lain dormant during the lockdown period fueled a recruitment spree that doesn’t appear to be slowing down.

But with demand high, it appears supply can’t keep up, and while vacancy numbers rising appears positive on paper, the continued shortage in the skills being demanded is making the employment market more competitive than ever.

Rising living costs are also contributing to the growing crisis, with many professionals considering their options as they seek greater reward for their skills in order to maintain the lifestyles they’re accustomed to.

Ann Swain, CEO of APSCo comments:

“Just last month, Microsoft’s second annual Worker Trend Index revealed that 43% of global staff are considering a job change this year while the Office for National Statistics (ONS) also reported yet another increase in vacancies in March. If this level of uncertainty, change and demand continues, the UK’s labour market will struggle to meet the needs of the economy.” (2)


Isn’t this good news for contractors?

Despite the concern over the skills shortage in the UK, the fact that businesses are turning to contract professionals is good for the self-employed sector, which has been affected by both the Covid pandemic and the introduction of private sector IR35.

Indeed, in Caunce O’Hara’s recent contractor IR35 survey we discovered an alarming 60% drop in work opportunities for contract professionals since IR35 was rolled out to the private sector on 6 April 2021, with 60% of contractor surveyed saying they had suffered a drop in income from the previous year.(3)



One thing is for certain; the economy cannot sustain the trend as it currently stands and a balance between skilled employees and contractors needs to be found to meet the demand of the recovering UK economy and those businesses who have adjusted their organisations to meet the digital demands imposed on them by the Covid pandemic.